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Why Buildings Care(Pay me now, or pay me later)November 28, 2011Presented by: Robert Zurlo and Colin Sanders

American UniversityAmherst College

Babson CollegeBentley University

Berkshire Community CollegeBethel University

Bloomsburg University of PennsylvaniaBoston College

Bowdoin CollegeBowling Green State University

Brandeis UniversityBristol Community College (MA)

Brown UniversityBryant University

Bryn Mawr CollegeBucknell University

Bunker Hill Community College (MA)California University of Pennsylvania

Cape Cod Community College (MA)Carleton College

Carnegie Mellon UniversityCentral State University

Champlain CollegeChapman University

Cheyney University of PennsylvaniaCincinnati State Technical and Community College

Claremont McKenna CollegeClarion University of Pennsylvania

Clemson UniversityCleveland State University

Colgate UniversityCollege of the Holy Cross

The College of WoosterColumbus State Community College

Connecticut CollegeCornell University

Cuyahoga Community CollegeDartmouth College

Davidson CollegeDrew University

Drexel UniversityDuke University

Duquesne UniversityEast Stroudsburg University of Pennsylvania

Eastern Oregon UniversityEdinboro University of Pennsylvania

Elms CollegeEmma Willard School

Fairfield UniversityFitchburg State College

Florida Institute of TechnologyFlorida State University

Franklin & Marshall CollegeFranklin University

Franklin W. Olin College of EngineeringGallaudet University

George Mason UniversityGeorgetown University

Georgia Institute of TechnologyGettysburg CollegeGonzaga University

Greenfield Community College (MA)Grinnell College

Gustavus Adolphus CollegeHamilton College

Hamline UniversityHampshire College

Harper CollegeHolyoke Community College

Illinois Institute of TechnologyIndiana University

Indiana University of PennsylvaniaIndiana University - Purdue University Indianapolis

Iowa State UniversityIthaca College

Kansas State UniversityKeene State College

Kent State UniversityKutztown University of Pennsylvania

Lakeland Community CollegeLe Moyne College

Lebanon Valley CollegeLewis & Clark College

Lock Haven University of PennsylvaniaLong Island University Brooklyn Campus

Long Island University C.W. PostLorain County Community College

Loyola College in MarylandLoyola Marymount University

Macalester CollegeManchester College

Mansfield University of PennsylvaniaMassachusetts Bay Community College (MA)

Massachusetts Institute of TechnologyMassasoit Community College (MA)

Medical University of OhioMiami University

Michigan State UniversityMiddlebury College

Middlesex Community College (MA)Millersville University of Pennsylvania

Missouri University of Science and TechnologyMount Holyoke College

Mount Wachusett Community CollegeNew Mexico State University

The New SchoolNew York University

North Shore Community College (MA)Northeastern Ohio Universities Colleges of Medicine

Northeastern UniversityNorthern Essex Community College (MA)

Northwestern UniversityNova Southeastern University

Ohio Agricultural Research and Development Center

Ohio University - AthensOregon Institute of Technology

Oregon State UniversityOwens State Community College

Pace UniversityPacific Lutheran UniversityPlymouth State University

Polytechnic Institute of NYU Pomona College

Portland State UniversityPrinceton University

Purdue UniversityQuinsigamond Community College (MA)

Rensselaer Polytechnic InstituteRider University

Roger Williams UniversityRowan University

Roxbury Community CollegeRutgers University

Saint Louis UniversitySaint Mary’s College (IN)

Saint Mary’s College of CaliforniaSeattle Pacific University

Seattle UniversityShawnee Sate University

Shippensburg University of PennsylvaniaSiena College

Sinclair Community CollegeSlippery Rock University of Pennsylvania

Smith CollegeSouthern Methodist University

Southern Oregon UniversitySt. Lawrence University

SUNY – Purchase CollegeSwarthmore CollegeSyracuse University

Temple UniversityTexas A&M University

The Catholic University of AmericaThe College of Saint Rose

The Johns Hopkins UniversityThe Ohio State University

The Pennsylvania State UniversityThe Sage Colleges

The University of AlabamaThe University of Alabama at Birmingham

The University of Alabama in HuntsvilleThe University of Dayton

The University of MississippiThe University of Oklahoma

Thomas Jefferson University Trinity College

Tufts UniversityUniversity of California San Francisco Medical Center

University of AkronUniversity of Alaska Fairbanks

University of ArkansasThe University of Central Arkansas

University of CincinnatiUniversity of Colorado at Boulder

University of DenverUniversity of Hartford

University of Illinois at ChicagoUniversity of Illinois at Urbana-Champaign

The University of MaineUniversity of Maine at Augusta

University of Maine at FarmingtonUniversity of Maine at Machias

University of Maine at Presque IsleUniversity of Maine at Fort Kent

University of MarylandUniversity of Massachusetts Amherst

University of Massachusetts BostonUniversity of Massachusetts Dartmouth

University of Massachusetts LowellUniversity of Michigan

University of Minnesota University of Missouri

University of Missouri - Kansas CityUniversity of Missouri - St. Louis

University of New HampshireUniversity of New Haven

University of Notre DameUniversity of Oregon

University of PennsylvaniaUniversity of Portland

University of RedlandsThe University of Rhode Island, Narragansett Bay

The University of Rhode Island, Feinstein ProvidenceThe University of Rhode Island, Kingston

University of RochesterUniversity of San Diego

University of San FranciscoUniversity of St. Thomas (TX)

University of Southern MaineUniversity of Toledo

University of VermontUpper Iowa University

Utica CollegeVassar College

Virginia Commonwealth UniversityVirginia Department of General Services

Wagner CollegeWellesley College

Wesleyan UniversityWest Chester University of Pennsylvania

West Virginia University Western Oregon University

Wheaton College (MA)Whitworth University

Widener UniversityWilkes UniversityWilliams College

Worcester Polytechnic InstituteWorcester State CollegeWright State University

Xavier UniversityYeshiva University

Youngstown State University

Sightlines Webinar

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Common vocabulary, consistent methodology, credibility through benchmarking

• 11 Year old company with offices in Connecticut, Pennsylvania, and Oregon• Provide services on over 320 campuses

• Sightlines database includes over 28,000 buildings and over 835 million GSF

Sightlines Profile

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Why buildings care

Stewardship:

•The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs”

Buildings care about:

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• Maximizing your return on physical assets

• Why buildings care about stewardship

• How to estimate stewardship needs of a campus

• The benefits of stewardship and drawbacks of not stewarding

• Questions and discussion

Webinar Overview

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Maximize your return on physical assets

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The average endowment

The average campus replacement value

Did you know this about colleges and universities?

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Maximizing your investment in campus facilities

Annual Stewardship

The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs”

Asset Reinvestment

The accumulated backlog of repair and modernization needs and the definition of resource capacity to correct them. “Catch-Up Costs”

Operational Effectiveness

The effectiveness of the facilities operating budget, staffing, supervision, and energy management

Service

The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery

Asset Value Change Operations Success

The Return on Physical Assets – ROPASM

Capital Operations

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Illustrating the connections

Annual Stewardship“Keep-Up”

OperatingEffectiveness

Asset Reinvestment

“Catch Up”

Service

The Return on Physical Assets – ROPASM

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Polling the audience

Does Facilities Management on your campus have a

recurring capital budget for repair and maintenance?

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Why should buildings care about stewardship?

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Pay me now or pay me later

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Pay me now or pay me later!

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Stewardship, another way of looking at itResources needed to keep a building consistently operating as when first built

2010 2020 2030 2040 2050 2060

S t e w a r d s h i p

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Estimating the stewardship need

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$0$5

$10$15$20$25$30$35$40$45$50$55$60

Annual Life Cycle Cash FlowYears

$/G

SFCash flow required to “keep up” a buildingThe life cycle of building components

Furnishings Minor Systems Major Systems

Younger Older

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Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation

3% Replacement Value0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

$12,000,000.0

Annual Stewardship TargetIndustry Standard

Industry Standard

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$0$5

$10$15$20$25$30$35$40$45$50$55$60

Annual Life Cycle Cash Flow Amortization of Life Cycle ExpensesYears

$/G

SFCash flow required to “keep up” a buildingThe life cycle of building components

Major Systems

Younger Older

Furnishings Minor Systems

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Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation

Life Cycle Need (Equilibrium) Annual Stewardship Target $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$4,000,000.0 $3,000,000.0

$5,000,000.0

$1,750,000.0

Annual Stewardship Target

Envelope/Mechanical Need Space/Programming Need

Industry Standard

Sightlines Methodology

$9.0M $4.8M

Life Cycle Need Determined by:- Campus GSF- Campus Age- Function of Space- Technical Complexity

Target Need:Life Cycle is discounted for

the coordination of modernization and

renovation

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Insufficient “Keep up” funding creates backlogRecurring capital falling further short of annual investment needs

FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011$0.0

$1,000,000.0

$2,000,000.0

$3,000,000.0

$4,000,000.0

$5,000,000.0

$6,000,000.0

$746,105.9 $834,669.2 $552,824.6 $413,346.1$714,586.5 $903,065.7 $765,720.8 $539,133.8 $791,631.1 $785,171.0 $565,350.4

$315,889.9$513,503.8

$704,460.5 $870,527.5$885,722.8 $432,386.5

$412,864.4$487,760.9

$492,175.5 $559,513.7$373,184.2

Total Annual Stewardship

Envelope/Mechanical Space/Programming Investment Target

Approximately $26.6 M has been deferred since FY2001

$ 3.9 M$ 3.0 M

$ 2.5 M$ 1.8 M$ 1.8 M

$1.8M

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Benefits of stewardship& Drawbacks of not stewarding

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To steward or not to steward. That is the question

Lack of stewardship:• Accelerates and heightens

capital requirements• Strains maintenance operations

and increases day-to-day costs• Negatively affects the quality of

work life for students, faculty, and staff

Investment in stewardship:• Allows building systems to

exceed expected life cycles• Avoids premiums for repairs by

competitively bidding projects• Eliminates system failure by

proactively addressing issues• Ensures no program

interruptions

For every $1 spent on stewardship, capital investment need is reduced by $3-4

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$1 in Stewardship = $3 in Asset Reinvestment

Planned DM Failure$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Temp Services

Failure Mitigation

Reduced Life

Construction

The Cost of System Failure

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$1.5M

$450K$150KX

The cost of ignoring it

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Pay me now or pay me later!

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Questions and Discussion